(Sharecast News) - Unilever has launched the 6bn (£5.3bn) share buyback it promised investors after selling its spreads business.
Register for Unilever plc share research updates
The Anglo-Dutch consumer goods company said it would buy an initial 3bn of shares starting on 8 May and ending no later than 19 July. Half the shares will be listed in London and half will be listed in Amsterdam.
"Any further tranches of the buyback programme, which may be conducted after completion of the initial programme, will be announced in due course," Unilever said.
The maker of Marmite, Persil and Ben & Jerry's announced its intention to buy back 6bn of shares at its first-quarter results in April. It is using the net proceeds from the 6.8bn sale of Flora and other spreads to private equity firm KKR late in 2017.
Company over the last few years have taken advantage of low borrowing rates. In respect of Dave Lewis at Tesco he is ex Unilever so he may well be considered for top role at Unilever. However, Dave did win out when Unilever wanted to increase its supply prices to Tesco a year ago or so but, Dave successfully resisted. How that went down at Unilever I dont know but, it certainly shows his no walkover. This has been a good long term core holding for me. (Sp 3957p)
"""Tescos (TSCO) turnaround has triggered fresh speculation that its CEO Dave Lewis is in the frame for the top job at Marmite maker Unilever (ULVR), with long-serving Paul Polman preparing to step down by the end of the year"""
Interesting, although now that the cloggies have got their way they will perhaps be rooting for a local boy to run it perhaps?
Nestle, Kraft Heinz, Unilever in race to buy Horlicks - biggest market is in India
In the UK, Horlicks remains the biggest seller in what is called the "hot milk drink" sector. GSK reckons that more than 36m people will have drunk Horlicks at least once in the UK last year. Britain is Horlicks' second-biggest market, accounting for roughly a fifth of the product's annual sales of about £155m.
But by far its biggest market is India. Like many iconic British brands, Horlicks enjoys a huge following in countries that used to be part of the empire. A staggering 20m cups of Horlicks are drunk in India every year - nearly as much as that other Indian favourite, Coca-Cola.
"""One of Unilevers biggest shareholders has hit out at the Anglo-Dutch consumer goods giants decision to abandon its double-headed structure in favour of a single corporate entity in the Netherlands. Iain Richards of Columbia Threadneedle, a top 10 investor, said his company was disappointed by its lack of engagement with shareholders ahead of the decision, which could lead to its expulsion from the blue-chip FTSE 100 index. - Telegraph"""
I tend to agree.
Relx however, appear to have made the right decision.
I seem to recall LKH saying at some point on the Shell discussion board that the problem with holding Shell A shares is that the Dutch have a witholding tax and it was a pain to get it back if you were a UK owner. Once the Unilever HQ moves to Rotterdam and it is a Dutch company will the Dutch levy a witholding tax which the UK shareholders will have to fill in forms to get back or will there be some sort of A & B share with the Bs listed in London so it works in the same way Shell does?
always worth a read, but particularly the point he makes regarding the value of brands and the fact that quite often they can be undervalued in a screaming fashion.
Here is the extract if you can't be arxed to click on the link :-
""""We have now had two bids for portfolio companies in 2018, with Temenos agreed
offer for Fidessa adding to that for Dr Pepper last month. Just on Dr Pepper I cant
resist noting that the £15 billion offer for its equity comfortably exceeds the £12
billion that the Cadbury board accepted for the whole of Cadbury as recently as
2010. DPS had been spun out of Cadbury in 2008 as a sop to activist
shareholders on its register. In 2010 Cadburys chairman described Krafts offer
as good value, but it is hard to see now (or then) how this could be so, given not
only the strong gains in Kraft and its successor Mondelez shares once the deal
closed, but now the eventual revelation that just one division of old Cadbury has a
strategic value worth more than the much larger rest of the group. I dont write
this to stir up old grievances about the short-sightedness of British boards and
institutional shareholders; well, only a bit. Rather as a reminder to us all of how
exceptionally valuable some rare brands are and the folly of letting them go to
cash bidders at anything but exceptionally high valuations."""
"I think the CEO's nationality was the top of the list frankly... the biggest worry is the protectionism they seek by hiding within the EU -- not great for shareholders if the management screw things up and the barriers are thrown up to sell the company."
Yes, Games - any of us might take issue with at least some of these "factors", but I was merely trying to look at what would be "logical" from the board's point of view.
Ultimately, I don't think shareholders should care much... Then again, I am obviously not as "patriotic" as some. Comes from being an instinctive "citizen of the world", probably...
However, I hadn't fully appreciated it would see ULVR kicked out of the FTSE 100 - again, won't matter to many, but it may have some technical repercussions, at the margin?
I think the CEO's nationality was the top of the list frankly.
Perhaps a better decision would be to have the base in London not Rotterdam and a primary listing on the London Stock Exchange together with the vast majority of the two countries employees but then again -- there's no accounting for bias I suppose.
At the end of the day the biggest worry is the protectionism they seek by hiding within the EU -- not great for shareholders if the management screw things up and the barriers are thrown up to sell the company.
The bigger part of the share capital being in the NV
The greater liquidity in the NV structure, plus a (marginal) valuation advantage
The Euro being the principal reporting currency
The general costs of operating an HQ, as a non-revenue generating cost centre
The relative attraction of greater takeover protection (again, highly debatable as to whether we all view this as an "attraction", but at least some of he board will!)
The nationality of the CEO (shouldn't be a factor, of course, but foolish to think it didn't play a role)
All in all, I doubt the board really spent too much time on this one...
"I would have thought the more pragmatic decision would be to link up with a free and forward looking trading nation not hampered by as many rules and regulations."
What, Games - you're suggesting they move the HQ to Norway?! Or they could decamp to Switzerland and shack up with their close mates at Nestle...
Rats deserting the sinking ship, perchance.... ?
All in all, a storm in a (PG Tips) tea cup. The dual legal structure was convoluted and archaic and its demise was long overdue... shareholders should be happy it's history. Could've gone either way maybe, but most factors pointed towards Holland as the logical choice - although I agree with those who suspect that the supposed extra takeover protections were probably more prominent in mind than they ought to be.
I actually believe the party line - I doubt Brexit was much of a consideration at all. Games' "rules and regulations" might be a relevant consideration, but only where they actually do business - that being most corners of the world - rather than where a paltry handful of HQ-wonks choose to hang out. And it's probably cheaper for them to do so in Holland than in London, in almost every respect.
I gather that 55% of shares are held through the Amsterdam register, which influenced the decision, but the protection from takeover is probably what influenced the board the most, they just don't want to admit it.
As for being in or out of the EU I think that's irrelevant, they almost certainly assume that we will be back in within about 20 years (assuming we ever leave).
"It's been a miserable week for equity traders so far, and a three-day losing streak still risks becoming four on Thursday as bulls search for reasons to keep buying.Having passed several key support levels during the decline from its January ..."
If it splits it's business into 3 divisions and much of the food business is in the Netherlands, surely a sale of such business in the future (seems to be what most are doing - dumping lower margin food businesses) then the move to Rotterdam might look a little silly and they will then attempt to move it back to London?
strange decision really, to tie your business to within the dying embers of part of the EU block.
I would have thought the more pragmatic decision would be to link up with a free and forward looking trading nation not hampered by as many rules and regulations.
Of course as Bill has pointed out, the HQ is really more symbolic than economic in nature -- not sure about that. Polman will tie this company in knots if he's not careful.
Games -- maybe it's time to move on from Unilever !!
some think shoppers are more attacted to Aldi/Lidl and own brand products -
I visit three Tesco stores all within East London and see loads of shoppers grabbing
ULVR products. UK is a huge and varied consumer market and it seems to me that
branded products still doing well and under Dave Lewis tsco is revitalised and stores
Shopping habits have changed drastically in the last few years.
We are all time pressured and aware of it.
Convenience and home delivery has become important with internet shopping growing every year.
Avoiding adverts by the way you consume media wasn't a thing I hadn't thought of.
The internet is decimating whole industries and no one is safe. By shopping on line you also aren't walking past the strategically end of aisle offers in supermarkets showing well known brands at a knock down price.
Not all but many shoppers who's incomes are falling behind inflation due to austerity are deserting the big supermarkets in droves for the likes of aldi/lidl who offer quality products without all the added costs of advertising and branding. Once people try these products, they realise that the premium brands aren't that much better, if better at all. And money they save there is money they can spend on something else.
The times they are a changing.
PS I have held ULVR twice and RB once, was considering buying into both as the price declines but have had second thoughts.
Pol Pot Polman has seen his pay package surge by 51% to £10.3m in 2017 and is line for a bumper hike in salary and potential bonuses under an overhaul of executive pay.
Paul Polmans mammoth 2017 pay deal includes a 1.15m euro (£1m) annual salary, 2.3 million euro (£2m) annual bonus and 7.2m euros (£6.4m) in long-term bonus scheme shares, according to the groups annual report.
The news comes less than two months after Unilever announced it would move most of the production of Colmans out of Norfolk and marks a big rise on his 7.7m euro (£6.8m) pay package for 2016.
And Unilever revealed plans to hike his total fixed pay, including salary and benefits, by 5% to £1.45m in 2018 under a pay review that could also hand him up to 11.2m euros (£9.9m) in bonuses and shares a year.
This would mark a 23% rise in the current maximum potential for bonuses.
Unilever said its remuneration committee was of the view that this increased maximum opportunity is fully justified by higher risk and more stretching performance requirements.
But it risks stoking controversy over pay in the upcoming annual general meeting season.
Unilever said its new pay plans will see a raft of changes, including the requirement for bosses to invest up to 67% of their annual bonus in Unilever shares, which they need to hold for at least four years.
The remuneration committee added that to earn the maximum pay under the new five-year incentive plan, bosses will have to deliver truly outstanding performance over the full five years.
Details of its pay plans follow results for the Anglo-Dutch group earlier this month showing a 9% increase in annual profits to 8.15bn euros (£7.1bn).
games - " It's creative which accounts for it's growth, but as far as efficiency it has a long way to travel yet."
So they can cut costs further, which helps. That's good.
Sell more stuff - advertising, new markets - like, where , etc.
All kinda basic and they're doing that. Of course, the bigger they get, the harder to find dramatic growth. Just keep an eye on the debt Polmate, Lupo doesn't like too much of an "efficient balance sheet" or whatever they call it, and keep the divis rising.
Crikey, looking out of the window, I'm glad we didn't go to tango today, we'd never get back up the lane.
Bill, there is a lot more Unilever could do, when you consider it's output per employee is far far behind it's competitors. It's creative which accounts for it's growth, but as far as efficiency it has a long way to travel yet. Games
"... maybe he could have a pop at Unilever as well and shake up the apple cart even more than 3G have in unnerving Mr Polman..."
Not sure what more ULVR could do, Games? Their bolt is very much shot... what more can they suddenly "find"?
I can't really see Polman saying, er, hang on, we've found another chunk of margin under the sofa, and we think our (relatively low) dividend cover actually needs to be a notch lower again, and by the way - have another big share buy-back (at what could still be the wrong price)....
Peltz may be quite effective at what he does, but he is nothing on Buffett and the Brazilian boys, if they really want to get serious. Activism is generally a "one and done" opportunity, it is not a gift that keeps on giving...
"Ah would that we could get the perspective of someone with that experience on the matter!"... "Any news on that front?"
Alas, not... total radio silence for over four months now. Whether or not it's a case of no news is bad news, I think we must assume the radio will remain silent.
Who knows... much like his beloved Unilever, it could be that the great man - lamenting the horlicks which our political leaders have made of things, from a position of relative strength, and faced with the possible (Hobson's) choice of either a hard right, "hard" Brexit dissembling Tory junta or a hard left politburo under Agent Cob and Comrade McDonnell (and national bankruptcy) - has himself taken off to the land of the tulips, taking with him only his clogs and his (doubtless) gold-plated Royal Dutch Shell pension.....?
I can see him now, holding court in the brown café - coffee and dodgy "cigar" in either hand - regaling his new compatriots with (tall) tales of adventure and derring-do on the High Seas (and on the iii discussion boards)...
I thought a few might like to read this article at the end of this fund report -- It's quite interesting to read about the mess that P&G have got themselves into over the last 10 years and the implications now that they have slashed all the lower margin brands, ramped up the buybacks to extreme level and can't find any growth to fund the expected dividend increases in coming years :-
I recently bought some P&G shares and promptly dumped it again with a 2% gain and a feeling, after much more reading, that many of it's products whilst still solid in many ways are just under too much attack because of their still very high prices.
It will be interesting to see if Nelson Peltz makes a difference in attempting to abolish the failed matrix management structure at P&G, that he claims ensures no one seems to be accountable.
Games -- maybe he could have a pop at Unilever as well and shake up the apple cart even more than 3G have in unnerving Mr Polman.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.